Foreign Direct Investment, Financial Development and Growth Convergence in ECOWAS


1 Department of Economics, Faculty of Social Sciences, Federal University Oye-Ekiti, Ekiti, Nigeria.

2 Department of Economics, Faculty of Social Sciences, University of Lagos, Akoka, Lagos, Nigeria.


This study examines the tendency of low-income economies in ECOWAS to converge with their high-income neighbors. It extends the frontier of knowledge by ascertaining how quickly financial development (FD) and foreign direct investment (FDI) would stimulate growth, causing low-income ECOWAS member states to catch up. Also, the required threshold for FD and FDI required to facilitate convergence were computed. To achieve the above, fifteen ECOWAS member states were examined within the period 1990 to 2017 using panel data obtained from the World Development Indicators (WDI) 2018 database. The Fully Modified Ordinary Least Square (FMOLS) technique of analysis was utilized and the study found an absence of conditional convergence among ECOWAS member countries. More so, FD-FDI threshold level required to aid conditional convergence is 22.8% and 3.77% respectively. Therefore, to ensure convergence, the study recommends that low-income member states must thrive to attract FDI and seamless credit to the private sector.